casper
11-04-2009, 07:26 PM
Disney takes China stride as Shanghai park gets nod
By Samuel Shen and Sue Zeidler
SHANGHAI/LOS ANGELES - The Walt Disney Co's breakthrough deal to build one of its signature theme parks in Shanghai marks a major advance for Western media and entertainment firms trying to crack a tough China market.
Wednesday's government approval for the theme park caps years of on-off talks between Disney and Chinese authorities, who are wary of too much foreign influence in the highly sensitive sectors of media and popular culture.
The new park planned for the Pudong new district of China's financial capital will take years to contribute to a company that rakes in more than $30 billion in annual revenue.
But analysts see the move as an important step forward for Disney and other Western media firms to make inroads into the vast and untapped Chinese media and entertainment market.
"They've been laying the groundwork for a park for many years by exposing the population to Disney properties, film, TV and merchandising," said Christopher Marangi, senior analyst with Gabelli and Co in New York.
"Adding a physical presence in the form of a park would really complete and add to the value chain in China."
The breakthrough comes just two weeks ahead of a scheduled trip to China by U.S. President Barack Obama, a visit analysts had expected to help spur a decision on the park.
The deal has been seen by some as a feel-good bilateral story, highlighting U.S. cultural influence and an investment that does not entail U.S. manufacturing job losses, while China gets a boost to its leisure sector and to domestic demand as it tries to trim its dependence on exports.
For Shanghai, China's financial hub, Disneyland could keep tourists coming after the curtain falls on the 2010 World Expo.
And Disney will hope the park, with an estimated price tag of $3.6 billion, will fare better than its Hong Kong property, which has struggled with lower-than-expected attendance and financial losses since it opened in 2005.
SMALL STEP FORWARD
Disney, Time Warner and News Corp have surprisingly little to show for their years of effort and extensive investments in China.
"I wouldn't say this is a one-off gain," said Vivek Couto, executive director of Media Partners Asia, on the deal's broader significance for foreign media's drive for a foothold in China.
"But it's in a non-sensitive space. It's a theme park. It's got nothing to do with television content that can be politically sensitive or competitive with other major Chinese companies in the space."
Even privately held domestic media can find the going tough, as leading Internet portal Sina found recently when it scrapped a merger with Focus Media due to government stonewalling over a deal that would have created a major new domestic media player.
By Samuel Shen and Sue Zeidler
SHANGHAI/LOS ANGELES - The Walt Disney Co's breakthrough deal to build one of its signature theme parks in Shanghai marks a major advance for Western media and entertainment firms trying to crack a tough China market.
Wednesday's government approval for the theme park caps years of on-off talks between Disney and Chinese authorities, who are wary of too much foreign influence in the highly sensitive sectors of media and popular culture.
The new park planned for the Pudong new district of China's financial capital will take years to contribute to a company that rakes in more than $30 billion in annual revenue.
But analysts see the move as an important step forward for Disney and other Western media firms to make inroads into the vast and untapped Chinese media and entertainment market.
"They've been laying the groundwork for a park for many years by exposing the population to Disney properties, film, TV and merchandising," said Christopher Marangi, senior analyst with Gabelli and Co in New York.
"Adding a physical presence in the form of a park would really complete and add to the value chain in China."
The breakthrough comes just two weeks ahead of a scheduled trip to China by U.S. President Barack Obama, a visit analysts had expected to help spur a decision on the park.
The deal has been seen by some as a feel-good bilateral story, highlighting U.S. cultural influence and an investment that does not entail U.S. manufacturing job losses, while China gets a boost to its leisure sector and to domestic demand as it tries to trim its dependence on exports.
For Shanghai, China's financial hub, Disneyland could keep tourists coming after the curtain falls on the 2010 World Expo.
And Disney will hope the park, with an estimated price tag of $3.6 billion, will fare better than its Hong Kong property, which has struggled with lower-than-expected attendance and financial losses since it opened in 2005.
SMALL STEP FORWARD
Disney, Time Warner and News Corp have surprisingly little to show for their years of effort and extensive investments in China.
"I wouldn't say this is a one-off gain," said Vivek Couto, executive director of Media Partners Asia, on the deal's broader significance for foreign media's drive for a foothold in China.
"But it's in a non-sensitive space. It's a theme park. It's got nothing to do with television content that can be politically sensitive or competitive with other major Chinese companies in the space."
Even privately held domestic media can find the going tough, as leading Internet portal Sina found recently when it scrapped a merger with Focus Media due to government stonewalling over a deal that would have created a major new domestic media player.